The Double Taxation Relief and International Tax Enforcement (Jersey) Order 2018

• Citation: S.I. 2018/1348
• Sections: 117

Section 1 Citation

This Order may be cited as the Double Taxation Relief and International Tax Enforcement (Jersey) Order 2018.

Section 2 Double taxation and international tax arrangements to have effect

It is declared that—

(a) the arrangements specified in the Schedule have been made with the Government of Jersey—

(i) with a view to affording relief from double taxation in relation to capital gains tax, corporation tax and income tax and taxes of a similar character imposed by the laws of the Government of Jersey, and

(ii) for the purpose of assisting international tax enforcement; and

(b) it is expedient that those arrangements should have effect.

Section 1

This Agreement shall apply to persons who are residents of one or both of the Territories.

Section 1

This Agreement shall apply to taxes on income and on capital gains imposed on behalf of a Territory or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

Section 1

For the purposes of this Agreement, unless the context otherwise requires:

(a) the term “Jersey” means the Bailiwick of Jersey, including the territorial sea;

(b) the term “United Kingdom” means Great Britain and Northern Ireland but, when used in a geographical sense, means the territory and territorial sea of Great Britain and Northern Ireland and the areas beyond that territorial sea over which Great Britain and Northern Ireland exercise sovereign rights or jurisdiction in accordance with their domestic law and international law;

(c) the terms “a Territory” and “the other Territory” mean Jersey or the United Kingdom, as the context requires;

(d) the term “person” includes an individual, a company and any other body of persons;

(e) the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(f) the term “enterprise” applies to the carrying on of any business;

(g) the terms “enterprise of a Territory” and “enterprise of the other Territory” mean respectively an enterprise carried on by a resident of a Territory and an enterprise carried on by a resident of the other Territory;

(h) the term “international traffic” means any transport by a ship or aircraft, except when the ship or aircraft is operated solely between places in a Territory and the enterprise that operates the ship or aircraft is not an enterprise of that Territory;

(i) the term “competent authority” means:

(i) in Jersey, the Minister for Treasury and Resources or his authorised representative;

(ii) in the United Kingdom, the Commissioners for Her Majesty’s Revenue and Customs or their authorised representative;

(j) the term “business” includes the performance of professional services and of other activities of an independent character; and

(k) the term “pension scheme” means any scheme or other arrangement which:

(i) is generally exempt from income taxation; and

(ii) operates to administer or provide pension or retirement benefits or to earn income for the benefit of one or more such arrangements.

Section 1

For the purposes of this Agreement, the term “resident of a Territory” means any person who, under the laws of that Territory, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature, and also includes that Territory and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that Territory in respect only of income or capital gains from sources in that Territory.

Section 1

For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

Section 1

Income derived by a resident of a Territory from immovable property (including income from agriculture or forestry) situated in the other Territory may be taxed in that other Territory.

Section 1

Profits of an enterprise of a Territory shall be taxable only in that Territory unless the enterprise carries on business in the other Territory through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits that are attributable to the permanent establishment in accordance with the provisions of paragraph 2 may be taxed in that other Territory.

Section 1

Profits of an enterprise of a Territory from the operation of ships or aircraft in international traffic shall be taxable only in that Territory.

Section 1

Where

(a) an enterprise of a Territory participates directly or indirectly in the management, control or capital of an enterprise of the other Territory, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Territory and an enterprise of the other Territory,

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

Section 1

Dividends paid by a company which is a resident of a Territory to a resident of the other Territory may be taxed in that other Territory.

Section 1

Interest arising in a Territory and beneficially owned by a resident of the other Territory may be taxed in that other Territory.

Section 1

Royalties arising in a Territory and beneficially owned by a resident of the other Territory may be taxed in that other Territory.

Section 1

Gains derived by a resident of a Territory from the alienation of immovable property referred to in Article 6 and situated in the other Territory may be taxed in that other Territory.

Section 1

Subject to the provisions of Articles 15, 17, and 18, salaries, wages and other similar remuneration derived by a resident of a Territory in respect of an employment shall be taxable only in that Territory unless the employment is exercised in the other Territory. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Territory.

Section 1

Notwithstanding the provisions of Article 14, income derived by a resident of a Territory as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Territory, may be taxed in that other Territory.

Section 1

Remuneration, including pensions, paid by the Government of one of the Territories to any individual for services rendered to that Government in the discharge of governmental functions shall be exempt from tax in the other Territory if the individual is not ordinarily resident in that other Territory or (where the remuneration is not a pension) is ordinarily resident in that other Territory solely for the purposes of rendering those services.

Section 1

Items of income beneficially owned by a resident of a Territory, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that Territory.

Section 1

The provisions of this Article shall apply notwithstanding any other provision of this Agreement.

Section 1

In the case of Jersey, double taxation shall be avoided as follows:

(a) When imposing tax on its residents, Jersey may include in the basis upon which such taxes are imposed the items of income, which, according to the provisions of this Agreement, may be taxed in the United Kingdom;

(b) Where a resident of Jersey derives income which, in accordance with the provisions of this Agreement, may be taxed in the United Kingdom, Jersey shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in the United Kingdom. Such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in the United Kingdom.

Section 1

Notwithstanding the other provisions of this Agreement, a benefit under this Agreement shall not be granted in respect of an item of income or capital gain if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Agreement.

Section 1

A legal person, partnership or association deriving its status as such from the laws in force in a Territory shall not be subjected in the other Territory to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which a legal person, partnership or association of that other Territory in the same circumstances, in particular with respect to residence, is or may be subjected.

Section 1

Where a person considers that the actions of one or both of the Territories result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those Territories, present his case to the competent authority of either Territory. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

Section 1

The competent authorities of the Territories shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of domestic laws concerning taxes of every kind and description imposed on behalf of the Territories, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

Section 1

The Territories shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Territories may by mutual agreement settle the mode of application of this Article.

Section 1

Each of the Territories shall notify the other in writing of the completion of the procedures required by its law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications and shall thereupon have effect:

(a) in Jersey:

(i) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of the second month next following the date on which this Agreement enters into force;

(ii) in respect of income tax, for any year of assessment beginning on or after 1st January next following the date on which this Agreement enters into force;

(b) in the United Kingdom:

(i) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of the second month next following the date on which this Agreement enters into force;

(ii) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April next following the date on which this Agreement enters into force;

(iii) in respect of corporation tax, for any financial year beginning on or after 1st April next following the date on which this Agreement enters into force.

Section 1

In relation to the whole Agreement:

The Territories acknowledge that the United Kingdom continues to be responsible for the international relations of Jersey in international law. This Agreement cannot therefore create obligations which are binding under international law and is not intended to alter or affect the constitutional relationship between Jersey and the United Kingdom.

It is understood that both Territories will apply this Agreement in the light of the Commentaries on the OECD Model Tax Convention as they may read from time to time, having regard to any observations or other positions that they may have expressed thereon.

Section 2

For the purposes of this Agreement, income derived by or through an entity or arrangement that is treated as wholly or partly fiscally transparent under the tax law of either Territory shall be considered to be income of a resident of a Territory but only to the extent that the same income is treated, for purposes of taxation by that Territory, as the income of a resident of that Territory.

Section 2

There shall be regarded as taxes on income and on capital gains all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property.

Section 2

As regards the application of the Agreement at any time by a Territory, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that Territory for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that Territory prevailing over a meaning given to the term under other laws of that Territory.

Section 2

Where by reason of the provisions of paragraph 1 an individual is a resident of both Territories, then his status shall be determined as follows:

(a) he shall be deemed to be a resident only of the Territory in which he has a permanent home available to him; if he has a permanent home available to him in both Territories, he shall be deemed to be a resident only of the Territory with which his personal and economic relations are closer (centre of vital interests);

(b) if the Territory in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him in either Territory, he shall be deemed to be a resident only of the Territory in which he has an habitual abode;

(c) if he has an habitual abode in both Territories or in neither of them, the competent authorities of the Territories shall settle the question by mutual agreement.

Section 2

The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop; and

(f) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.

Section 2

The term “immovable property” shall have the meaning which it has under the law of the Territory in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.

Section 2

For the purposes of this Article and Article 22, the profits that are attributable in each Territory to the permanent establishment referred to in paragraph 1 are the profits it might be expected to make, in particular in its dealings with other parts of the enterprise, if it were a separate and independent enterprise engaged in the same or similar activities under the same or similar conditions, taking into account the functions performed, assets used and risks assumed by the enterprise through the permanent establishment and through the other parts of the enterprise.

Section 2

For the purposes of this Article, profits from the operation of ships or aircraft in international traffic include:

(a) profits from the rental on a bareboat basis of ships or aircraft; and

(b) profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise;

where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.

Section 2

Where a Territory includes in the profits of an enterprise of that Territory – and taxes accordingly – profits on which an enterprise of the other Territory has been charged to tax in that other Territory and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Territory if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Territory shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Territories shall if necessary consult each other.

Section 2

However, dividends paid by a company which is a resident of a Territory may also be taxed in that Territory and according to the laws of that Territory, but if the beneficial owner of the dividends is a resident of the other Territory;

(a) except as provided in sub-paragraph b), such dividends shall be exempt from tax in the Territory of which the company paying the dividends is a resident;

(b) where dividends are paid out of income (including gains) derived directly or indirectly from immovable property within the meaning of Article 6 by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax, the tax charged by the Territory of which the company paying the dividends is a resident shall not exceed 15 per cent of the gross amount of the dividends other than where the beneficial owner of the dividends is a pension scheme established in the other Territory, where the exemption provided in sub-paragraph a) shall apply.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

Section 2

However, interest arising in a Territory may also be taxed in that Territory according to the laws of that Territory, but if the beneficial owner of the interest is a resident of the other Territory and at least one of the conditions mentioned in paragraph 3 is met, that interest shall be taxable only in that other Territory.

Section 2

However, royalties arising in a Territory may also be taxed in that Territory according to the laws of that Territory, but if the beneficial owner of the royalties is a resident of the other Territory and at least one of the conditions mentioned in paragraph 3 is met, those royalties shall be taxable only in that other Territory.

Section 2

Gains derived by a resident of a Territory from the alienation of shares, other than shares in which there is substantial and regular trading on a recognised stock exchange, or comparable interests, deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Territory may be taxed in that other Territory.

Section 2

Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Territory in respect of an employment exercised in the other Territory shall be taxable only in the first-mentioned Territory if:

(a) the recipient is present in the other Territory for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Territory; and

(c) the remuneration is not borne by a permanent establishment which the employer has in the other Territory.

Section 2

Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Territory in which the activities of the entertainer or sportsman are exercised.

Subject to the provisions of Article 18, pensions and other similar remuneration paid to an individual who is a resident of one of the Territories shall be taxable only in that Territory.

Section 2

The provisions of this paragraph shall not apply to payments in respect of services rendered in connection with any trade or business carried on by either of the Governments for purposes of profit.

Payments which a student or business apprentice who is or was immediately before visiting a Territory a resident of the other Territory and who is present in the first-mentioned Territory solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that Territory, provided that such payments arise from sources outside that Territory.

Section 2

Notwithstanding the provisions of paragraph 1, where an amount of income is paid to a resident of a Territory out of income received by trustees, or by personal representatives administering the estates of deceased persons, and those trustees or personal representatives are residents of the other Territory, that amount shall be treated as arising from the same sources, and in the same proportions, as the income received by the trustees or personal representatives out of which that amount is paid.

Any tax paid by the trustees or personal representatives in respect of the income paid to the beneficiary shall be treated as if it had been paid by the beneficiary.

Section 2

In this Article the term “offshore activities” means activities which are carried on offshore in a Territory in connection with the exploration or exploitation of the seabed and subsoil and their natural resources situated in that Territory.

Section 2

Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom or, as the case may be, regarding the exemption from United Kingdom tax of a dividend arising in a territory outside the United Kingdom or of the profits of a permanent establishment situated in a territory outside the United Kingdom (which shall not affect the general principle hereof):

(a) Jersey tax payable under the laws of Jersey and in accordance with this Agreement, whether directly or by deduction, on profits, income or chargeable gains from sources within Jersey (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Jersey tax is computed;

(b) a dividend which is paid by a company which is a resident of Jersey to a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;

(c) the profits of a permanent establishment in Jersey of a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;

(d) in the case of a dividend not exempted from tax under sub-paragraph b) above which is paid by a company which is a resident of Jersey to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit mentioned in sub-paragraph a) above shall also take into account the Jersey tax payable by the company in respect of its profits out of which such dividend is paid.

Section 2

Where a benefit under this Agreement is denied to a person under paragraph 1, the competent authority of the Territory that would otherwise have granted this benefit shall nevertheless treat that person as being entitled to this benefit, or to different benefits with respect to a specific item of income or a capital gain, if such competent authority, upon request from that person and after consideration of the relevant facts and circumstances, determines that such benefits would have been granted to that person in the absence of the transaction or arrangement referred to in paragraph 1. The competent authority of the territory to which the request has been made will consult with the competent authority of the other Territory before rejecting a request made under this paragraph by a resident of that other Territory.

Section 2

The taxation on a permanent establishment which an enterprise of a Territory has in the other Territory shall not be less favourably levied in that other Territory than the taxation levied on enterprises of that other Territory carrying on the same activities.

Section 2

The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Territory, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Territories.